Alaska’s Economic Outlook: Forecasting 2025

Infrastructure Indicators

While the oil, gas, and mining sectors are largely credited with spurring the boom in construction employment in Alaska, the other driver is federally funded infrastructure projects.

“Good news is everywhere we look,” says Christine O’Connor, executive director of the Alaska Telecom Association (ATA). “We have access to resources we never expected to have.”

Some of those resources were received pre-pandemic from the US Department of Agriculture (USDA) Reconnect Loan and Grant Program. “Those funds will definitely play into the economic activity that’s happening in 2025,” explains O’Connor. “We received $600 million in grants just from that one USDA program. We have numerous projects underway, with most being in some form of engineering, permitting, pre-construction, or construction now and extending over the next two to four years.”

The Tribal Broadband Connectivity Program brings more good news for 2025. This $3 billion program is directed to tribal governments for broadband deployment on tribal lands, broadband affordability, digital inclusion, distance learning, and telehealth. “Many tribal leaders have partnered with ATA members to build the necessary infrastructure,” says O’Connor.

A third big funding source will carry the positive economic outlook beyond 2025. The Broadband Equity Access and Deployment Program is a $42.5 billion program nationwide with a mandate to connect every single American with broadband. “Alaska’s allocation was about $1 billion, and we expect those grants to likely be announced next fall,” says O’Connor.

In November 2024, the Federal Communications Commission announced the launch of the Alaska Connect Fund, a new initiative designed to support the expansion and enhancement of broadband service across Alaska. This new program aims support the development of broadband networks funded through the Infrastructure Investment and Jobs Act (IIJA) of 2021, ensuring that more Alaskans will have access to high-speed internet in the years to come.

“It truly is a transitional time going from communities not being connected to a path for all to be connected,” concludes O’Connor.

When it comes to other public facilities, “Dozens of local governments have active infrastructure projects underway, including transportation, energy, water, and sewer,” notes Niles Andreassen, executive director of the Alaska Municipal League. “My general sense is that federal funding these past few years has helped bolster local economies. With these funds invested in infrastructure, local governments are better able to meet the needs of Alaska’s communities.”

Many communities still have significant needs, Andreassen points out, but he’s optimistic about 2025 thanks to IIJA funding.

Even with the sizable amount of funds flowing into Alaska for these important infrastructure projects, obstacles remain. “There are headwinds that slow communities down,” explains Andreassen. “Limiting factors include cost-share requirements, limited workforce, and supply chain issues. The Build America Buy America Act [a section of the IIJA], for instance, requires that all iron, steel, manufactured products, and construction materials used in these federally funded projects for infrastructure must be produced in the United States, which local governments have said add to project costs and timelines.”

Human Resource Horoscopes

Another hurdle to fully utilizing the benefits of federal infrastructure funds lies in having a sufficient workforce. “It’s one thing to secure the funds, but an entirely different level of management to deliver projects and comply with all the federal requirements,” says Andreassen. “Sometimes it feels like it’s two steps forward and one step back.”

A decrease in the state’s working-age population, forecast through 2050, is already pinching several industries. “Maintaining the workforce continues to be a challenge,” says Logan. “Companies are paying higher wages to get and keep people. One of the strategies companies are using is to find experienced people who are retired but who are willing to come back for a couple of years.”

Alaska’s healthcare industry is posting robust job projections, with labor demand outstripping supply. “The need is really prevalent now,” explains Jared Kosin, CEO of the Alaska Hospital and Healthcare Association. “In hospitals alone, we have a 20 percent vacancy rate for nurses. Additionally, there is a lot of diversity in the types of jobs within the healthcare industry. If you count turnover and growth, we need to hire 8,000 new healthcare workers each year.”

The demand points to the need to enlarge the labor pie. Kosin says, “We can’t meet that demand by pulling from other positions within our industry. If you fill one vacancy from another, you just create another vacancy.”

Higher salaries can sweeten the recruiting pitch, but they aren’t keeping up with housing prices, which continue to rise in Alaska as everywhere else. An unprecedented focus on housing solutions could fix that problem, according to Bryan Butcher, CEO and executive director of the Alaska Housing Finance Corporation.

“I met with Governor Dunleavy more last year on housing than I’ve met with all the other governors I’ve worked with put together,” Butcher told the RDC conference. “We saw the legislature appropriate more money for housing, more than we’ve seen in these ten to twelve years.”

Similar attention is being given to childcare, which is often a barrier to employment. Kati Capozzi, president and CEO of the Alaska Chamber, told the RDC conference, “It’s been a bit of an awakening in the last twenty-four months,” with respect to childcare.

“The first piece of childcare legislation ever in Alaska passed at, like, 11:56 p.m. on the last day of the session,” Capozzi noted. “It added tax incentives for corporate-tax-paying businesses in the state; it works a lot like the education tax credit.”

The latest long-term projection of Alaska’s population shows the 0–19 age bracket declining from more than 190,000 today to less than 170,000 by 2050. Action on childcare could bend that trend.

Matanuska Telecom Association

The same forecast from Robinson’s Research and Analysis Section shows a steady rise in the 45–65 age bracket after 2030. Yet the aging population has not yet alleviated housing availability.

“Baby Boomers moving out of the workforce are not necessarily moving out of their houses… but at some point, there will be a large freeing up of housing,” Robinson explained at RDC.

Given the projected population changes, the demand for healthcare workers will continue to grow over the next ten years. Alaska’s current population of residents aged 65 and older is 110,490. By 2035, that population is expected to peak at 135,000, but it will be echoed by another rapid increase in the aging population, namely the large cohort of Millennials.

Kosin says, “The needs will continue to grow, and we are focused on being ready to meet the healthcare needs of this aging population.”

Thus, economic projections for Alaska’s healthcare industry continue to rise. “Many people don’t realize this, but by wages paid out, healthcare is the largest industry in the state. We pay out over $3 billion in direct wages and account for 43,000 jobs within the state today,” Kosin says. “We also have extremely robust workforce projections. In the next ten years, 4,500 new jobs are projected for Alaska’s healthcare industry—more than any other sector.”

Trends in place during 2024 put Alaska in a good position for 2025, even if those glimmers are hard to see.

“I really feel like there’s a disconnect in this state between the realities of the numbers, which as Dan [Robinson] has pointed out are not ‘doom and gloom,’ and the ‘doom and gloom’ atmosphere a lot of us have,” Butcher told RDC. “It’s really important that we understand the difference between being optimistic, talking optimistically about our state, and feeling like ‘oh, woe is me.’”